tv Nightly Business Report PBS February 8, 2013 4:30pm-5:00pm PST
you, thank you. the first step is to go online to pbskidsgo.org and earn points for francine or for me or for any of your favorite pranksters. and well, i suppose you could play for one of the electric company members, too. so, it could likely to be -- that makes no sense. francine has filmed 20 broken rerds (sneezing) it's another filming... (laughter)
>> this is n.b.r. >> susie: good evening, everyone. i'm susie gharib. it's the first major storm to hit the northeast since hurricane sandy and it could be one for the record books. residents and businesses spent the day preparing for the worst. >> tom: i'm tom hudson. the u.s. trade gap narrows as the world buys more made in america products and the u.s. buys less foreign oil. >> susie: and with gas prices rising, chevy hopes its new diesel chevy cruze will attract buyers looking for more miles per gallon. >> tom: that and more tonight on "n.b.r." >> susie: millions of people are bracing tonight for a powerful snow storm that could cripple the east coast. some forecasters say this could be the blizzard of the century with record amounts of snow and extremely strong winds. in parts of the northeast, transportation was shut down. the governors of massachusetts and connecticut declared a state
of emergency and banned car travel, train service and cancelled flights in and out of boston. while the worst of the storm has yet to hit, many businesses and cities were busy making prarations today. erika ller repor. >> reporter: this monstrous storm is already being compared to the great blizzard of '78, when vast amounts of snow blanketed the ohio valley and the great lakes. that storm lasted 36 hours, leaving cars stranded. this storm could also be historic. weather forecasters predict it will leave up to three feet of snow in a wide swath stretching from new york to boston. preparations are well underway. airlines cancelled nearly 4,500 flights, leaving many travelers stranded. >> here at laguardia, as you can see, our port authority men and women are hard at work preparing for the storm. our fleet of snow removal vehicles and sand and agent spreaders are prepped and ready for action. >> reporter: amtrak has also canceled many trips in the
northeast. the storm is expected to deliver a harsh blow to areas of the east coast still recovering from superstorm sandy. >> hurricane sandy cost the economy a $100 billion and the recovery efforts are still going on. so, it could delay some rebuilding activity... activity >> reporter: in new york city and elsewhere, preparations are being made for clean-up. >> we have more than 250,000 tons of salt on hand. >> reporter: according to the long island power authority, the storm has the potential to cause power outages for 100,000 customers on long island. and for the first time ever, lipa is deferring storm operations and response to its subcontractor, national grid. but in manhattan today, it was mostly business as usual, although many workers did try to leave early to beat the snow. and if the snowfall is anywhere close to the storm of '78, you'll see the impact in economic data in the weeks
ahead. >> usually major storms cause increased volatility in economic data. so, that jobless claims jump significantly in the beginning as government offices close, because of the storm. and they surge back up after the offices reopened. >> reporter: if there's a silver lining in this storm, it's the timing. the heaviest snowfall will happen over the weekend. and the clean-up is expected well before valentines day, which contributes $18 billion to the economy. erika miller, "n.b.r.," new york. >> susie: that massive storm is also pushing up fuel prices. those higher prices come as gasoline is also on the rise. joining us now with the outlook for energy, alan harry. he's portfolio manager and c.e.o. of the spartan commodity fund. alan, let me first start off by talking to you about home heating oil. we saw prices up this week 3%.
what is the trend going forward? >> well, thank you for having me. what i look at right now is short term we're going up a little bit more. longer term we're heading down. two, three weeks we're going to go up just a little bit more. after that, down we go. >> susie: why is that? >> well, i think we're coming to the close of the heating season. we already have an idea of what days we have left of heating. and it's not using up enough. so they've kept a lot in reserve, a lot of speculation coming to the market, and it's not getting used up. two, three weeks we have a great idea of where we will sit heating season wise. after that, down we go displuz for most of the u.s., households use natural gas. they don't use heating oil. and the ones that do are mostly in the northeast. so come march, will their pricees, their home bills be down? >> by the end of march, it will be much lower. 10% lower is what i'm estimating. >> susie: let me talk to you about gasoline because we've also seen gasoline prices have been going up every single day
for the last 21 days and averaging $3. a gallon. where can we expect gasoline prices to go over the next couple of weeks? >> i think it's going to follow a similar trend of heating oil. i think we have another two to three weeks of somewhat higher prices. after, that i also think it's going to go down. the reason why, refineries are going to switch over to unleaded gas and there will be more than enough supply in the marketplace, and because of that i think we see a drop. i think we're going to see a 20 cent drop by the e of march. >> susie: also, tell us about supplies, we saw during hurricane sandy here in the middl northeast, most people were not prepared to be short on line, people couldn't get fuel for their generators, they were out of power. what do you see the situation for supplies with this big snowstorm coming into the northeast? >> i think we're going to have a pendulum effect here. myself included, i did not prepare properly for hurricane
sandy. this time, i'm fully prepared. everything is filled up and ready to go. i do not think the snowstorm is going to be that bad, if it's not, we're not going to be using much of the snowe blowers and gen raise. if it is bad, different than hurricane sandy, we won't be using our cars. we'll be stay standstill. either way it puts pressure on unleaded gasoline. you have people buying up the supply right now, the next month to month and a half they already have the unleaded gas. now it's going to go down. >> susie: based on what you're saying alan, what does this mean on the macro side in terms of oil prices? we've seen u.s. oil prices have been hovering around the $90-$95 range. crude has been a lttle higher, $120 range. where do you see oil prices over the next couple of months? are they going to go higher or stay just where they are? >> short term higher. i think we break the 98 oil. if we break, that i think we see $100. after that i think we break the $94 level, and when we do, i
think we're going to see $89-$86 in crude oil. >> susie: all right, fascinating. thank you alan. we appreciate you coming on the phone. alan harry, c.e.o. of the spartan commodity fund. >> tom: still ahead, chevrolet gambles on higher gas prices, betting they'll attract buyers for its diesel-fueled chevy cruze. >> susie: no snow day here at the new york stock exchange, but it was a light day of trading. still stocks moved higher, as investors were encouraged by positive news on trade and the unexpected narrowing of the trade gap. we'll have more on that in a moment. the dow rose almost 50 points, the nasdaq added 28, the s&p 500 up 8.5 points. for the week, the dow fell a fraction, the nasdaq gained about 1.5%. the s&p also up on the week. >> tom: thanks to less foreign oil coming into the u.s. and more made in america products shipped overseas, the u.s. trade deficit fell sharply last month. the combination now has
economists believing the economy grew in the last few months of 2012, even though data out last week showed the economy fell slightly in the fourth quarter. but a closer look shows some cause for caution. darren gersh reports. >> reporter: the december trade numbers were much better than forecasters expected. the deficit between what the u.s. exports and what we import fell 21% to $38.5 billion. and that means exports likely boosted growth in the last three months of 2012. >> so this is a good sign that exports were a little stronger than we thought when the numbers were first estimated and that is obviously a good sign for the economy. again, the economy is obviously growing way too slowly, but at least on this note, i think it will be revised upward. energy is a now a bright spot for the u.s. economy. thanks to new fracking technology, surging domestic production cut crude oil imports last year by 227 million barrels. but tt success was offset soewhat by imports of manufactured goods.
>> the flip side of the coin is that our imports of non-oil goods are still going up. they're going up pretty rapidly. and that is of great concern to me as an economist. those are the things that compete with our own manufactured products. >> reporter: china remains a major competitor for u.s. companies. our trade deficit with china hit a record $315 billion last year. separately, china reported it's exports grew 25% over a year ago, easily beating expectations. the robust growth was attributed to aggressive new lending by chinese banks. >> just a few months ago, the chinese economy was in contraction. we've seen really two or three months where we are seeing much stronger growth in china and that's increasing the demand for goods there. >> reporter: but analysts say the news from china may have been somewhat distorted by statistical quirks and the start of the chinese new year. looking at a few months of data shows the big story in china is one of moderate, but solid
growth. >> they're not falng apart. growth is going to hold in the range of 7% to 8%. but this is not going to go back to 10% either. there's no signs of that. it looks like its a more permanent, but controllable slow down. >> reporter: china remains strong in assembling and processing goods like iphones that are then exported by foreign companies. when economists exclude this processing trade, they figure china may actually be running a trade deficit. darren gersh, "n.b.r.," washington.
>> susie: diesel powered passenger cars and trucks made up just 1% of car sales in the u.s. last year and while that's up five-fold in as many years, it's still a tiny portion of e u. au indtry. ruben ramirez takes a look at some car makers hoping american consumers fall in love with diesel this year. >> reporter: "if at first you don't succeed, try again." that's g.m.'s motto g.m. as it brings diesel passenger cars. back to american consumers, the diesel chevy cruze will start hitting showrooms this april. what's different today from general motors chevy's diesel cars back in the 1980s? >> they don't smell, they don't smoke, the don't clatter, they're quick. >> reporter: while clean-diesel technology has come a long way, g.m.'s still treadinlightly. >> we a being vy cautus about the market and the demand for the market. it's a big change within general motors that's happened in the last couple of years to say, let's not overbuild, let's understand the marketplace and try to build to where the demand is. >> reporter: it appears other car makers are also pinning their hopes on diesel.
jeep is launching a diesel grand cherokee. mazda will have a diesel mazda 6. already, v.w. has had success with diesel versions of its passenger cars here in the u.s. one big reason g.m. expects the cruze to gain traction among u.s. csume, climbingas prices. >> people spend a little bit more for the hybrid car, the electrified car, because they know it's going to pay them back over time and we've seen with those companies that have clean diesel today that same set of circumstance. >> reporter: analysts say once a gallon of gas hits $4.50, diesel cars become more cost-effective in terms of payback than any other technology. diesel currently averages, just over $4 a gallon nationwide. for long distance highway drivers, where hybrids or electric cars don't make sense, g.m. says the cruze will get about 50 miles a gallon. but the clock is ticking. if mainstream cars like the cruze, cherokee and six don't sell americans on diesels. it probably can't be done. while 40% of g.m.'s cruze sales
in europe are diesel-powered, we'll have to wait until spring to see what kind of interest there is from consumers here in the u.s. ruben ramirez, "n.b.r.," new york. >> susie: mcdonald's is off to a slow start for 2013. it said january sales slipped almost 2%, blaming slow business in europe and japan. sales dropped more than 2% in europe, while they tumbled almost 10% in the asia-pacific region. but the results were better here inhe u.s. with a surprise jump f about 1%, thanks mcdonald's popular dollar menu.
as for mcdonald's shares, up slightly to about $95 a share. >> susie: just two days after the u.s. post office said it will stop saturday deliveries so it can save money. we get more details on how bad things are. the u.s. postal service today reported a loss of more than $1 billion for its first fiscal quarter. that's the october to december period and tom, it's usually the strongest time of year for the post office thanks to holiday cards and packages, but there was as sharp drop in mail volume d this just makes a case for congress to help fix the finances of the post office. >> tom: it looks like it could be a difficult saturday tomorrow on the east coast for all those mail cariers with the snowstorm coming through. in our market focus here, susie, on this friday night, stocks were able stocks crept higher even as many traders paid more attention to the weather. the s&p 500 moved up at the opening bell, helped by the smaller trade deficit in december. it finished up 0.6% a five and a half year high.
trading volume was lighter on the big boardith 663 llion shares. under two billion traded on the nasdaq. technology helped pull the market higher with the tech sector up 1%. energy and consumer discretionary sectors were higher by 0.8% each. specialized semiconductor maker micro-chip technology led that sector. the company's outlook was much stronger than expected. shares gained 7.2%, rising to their highest price since march. micro-chip's gear is used in the automotive and industrial markets. al helpingech ocks was apple's 1.4% gain. shares have seen some buying this week after their steep fall since late january. and hewlett-packard gained 2.6% was the best among dow stocks. late today the largest outside investor in dell said it does not support the $24 billion deal to take it private. southeastern asset management owns about eight and a half percent of dell. it said the deal "grossly undervalues the company."
boeing warned customers that deliveries due very soon of its dreamliner 787 could be delayed. gulators are sti workingo identify and fix the lithium batteries catching fire. shares dipped 1.1%. earlier this week shares were less than a dollar away from a new 52 week high despite the problems with the dreamliner batteries. a day after new jersey governor chris christine got behind an effort to legalize online gaming in the garden state, caesars shares continued climbing. the stock rallied 38.1%. volume increased almost 20 fold. the proposal would allow atlantic city casinos to run gambling websites for players physically inew jersey. users in other states where online gaming is legal would be allowed to bet as well. another casino with a presence in the garden state, boyd gaming was 9.4%. in a different kind of online business, a.o.l. saw business improve last quarter with it first overall growth of revenue in eight years.
earnings were almost twice what they were a year ago and matched estimates. a.o.l. continued to see its internet subscription business shrink, but an increase in ad sales more than half up for it. shares rallied 7.3%. t growth ad sales ca priri from third party sales ads on websites a.o.l. does not own. professional networking website linked-in shot up to a new high, gaining 21.3%. late yesterday it reported a strong fourth quarter. the business of credit ratings was in the headlines this week with the federal government accusing standard and poor's of fraud over rating of mortgage bonds during the housing boom. competitor moody's is not part of the lawsuit, but strong earnings couldn't fight the fear of legal risk. with more companies selling bonds, fourth quarter earnings were up big froa ye earlier and easily beat estimates. but shares continued sinking, down another 7.7%. they have lost a fifth of their value this week.
four of the five most actively traded exchange traded products were higher. the japan fund lost 0.4% and that's tonight's market focus. >> tom: with the s&p 500 up more than 6% already this year, consistency and dependability, not explosive growth are what tonight's market monitor is looking for. kevin caron is a portfolio manager with washington crossing advisors. he's with us tonight fr a snowy new york at the ndaq. kevi whyhy away from rapidly growing companies in this environment?
>> well, i think what you're seeing is a slow-down in earnings growth. but on the other hand, the economy is doing somewhat better than it was, let's say six months ago. so investors who come into the year looking for very fast earnings growth as justification for their stock prices may be somewhat disappointed. so the economy is getting a little bit better, but wave come out of the recession. we've had a full recovery in profits, so here, going forward, we pect to see slower growth and cnsisncy, think, is the key in that kind of environment. >> tom: you mentioned a full recovery in profits. are stocks, broadly speaking, at this level expensive given the lack of earnings growth that you forecast? >> i don't think they're either expensive or cheap. and the reason i say that is because the standard & poors 500, which is a proxy for the stock market, has about $100 of earnings expected underneath it and it trades at $1500. with the stock market trading at
15 times underlying eaings, that's aut a normal valuation for the market. i think profits can be had if you look for individual opportunities. >> tom: you brought two along with you tonight beginning with the world's largest retailer, wal-mart, wmt the ticker symbol. trading a little on the higher end of the range we've seen on the past 12 month, over 71 and change, yielding two%. what do you expect out of wal-mart this year in terms of its stock price? >> we expect to see a stock that phrase, let's say, the low 70s into theid or upper 80s whe a decent dividend yield with a total return of maybe 20%. a lot of this comes from want fact that it's way global retailer that's doing better overseas. the size of this company is impressive, and that gives it a tremendous amount of clout when it goes into the market. it's a ladder in every category. we think it's got a great balance sheet, consistent earnings and trades at a reasonable price. >> tom: its biggest competitor
you can't walk into-- its fastest growing competitor, amazon, do you think th will take volume away? >> it'nteresting youention hat. if yo lo at amazon, amazon has tremendous distribution here in the united states and may be struggling somewhat in terms of replicating that in other markets, like china. on the other hand, when you look at a company like wal-mart, that company is growing very nicely overseas, expanding and making their overseas operation much more efficient. so wal-mart has a very nice growth trajectory overseas and i think is going to be very competitive against just about any and all comers, including amazon. >> tom: interesting, kind of an international play with wal-mart. you also like extensor, a business consulting services firm but the stock prices has risen, close to the high end of the range. put new money to work here in the low 70s? >> yes, just as wal-mart was a
play on the global consumer, exsensor, formerly anthony consulting, is a play on improving business inspector generalling. businesses are in a position where they need to be more competitive, and everything they do is geared toward th goal. ifou expec see an improving economy, which we're seeing currently, you want to make sure you own companies that are tied to business spending, and with the breadth of knowledge and the distribution and the size of this company-- they employ roughly 250,000 people across about 48 countries -- that's a lot of expertise to bring to businesses who are in significant need of improving their productivity now that profits have recovered. and, again, very consistent, great balance sheet, good valuations. >> tom: kevin, do you have any positions in want two stocks mentioned tonight? >> i do not. although,y parent company does make markets in both of these stockses and has an investment banking relationship with exsensor. >> tom: kevin caron with us,
with washington crossing advisors. >> susie: monday on "n.b.r." it's toy fair in new york city. we'll check in on mattel and hasbro to see what's ahead for the toy industry in 2013. and our nbr-u partners at stanford join us for a look at how we decide where to invest our money. their research shows it's all about our economic experiences. you can read the article on www.nbr.com. justook for the "nbr" ta when it comes to realizing your long term goals, sometimes it can take a little longer than you think. this week lou's been thinking about overnight success. here's author and educator lou heckler. >> one of the things i love about sharing these moments with you is that it is for me a return to public television. i started working in public tv in 1966 at the university of north carolina at chapel hill. i was very fortunate: the station did two 15-minute newscasts every weekday and i was chosen as one of the anchormen. by the time i left hool, i had airemorehan thousand newscasts. over the next dozen or so years,
i worked at three commercial stations in three states and then started a speaking, writing and coaching business in 1980. i always hoped to get a chance to be on national television. now, more than a few years later, here i am-- an overnight success! and, that brings me to "angry birds." this silly little video game is almost addictive. it's fun, it's easy to get started, and it is also the 52nd product created by a scandinavian company called rovio. 52nd! not all of us can create a success like "angry birds." what we can do is follow the advice of retired general colin powell. success, he said, is the result of perfection, hard work, learning from failure, loyalty and persistence. so, as a person who waited more than 45 years to realize his dream, i can only say, stick with your dream. before you know it, you will be that overnight success. it just might take a few more overnights than you planned on! i'm lou heckler.
>> tom: it's consided one of the greatest moments in spos histor- the 80 u.s. olpic hockey team's victory over the soviets. now a piece of "the miracle on ice" can be yours. team captain mike eruzione is auctioning off his game jersey, hoping to raise as much as $1 million for his charity which supports causes in his hometown in massachusetts. he's also selling the hockey stick he used to bury the game winning shot. susie, i know you've blizzard 2013 known to put on skates before, figure skates but not ckey sticks. how out it? >> i wish i could skate like those guys and i thought that was an amazing game they played and i loved the movie and i love sports movies and that's one of my favorites. >> tom: you can still hear the call, everybody can hear it, "do you believe in miracles? that's "nightly business report" for friday, february 8. have a great weekend everyone and you, too, tom.